Strategy CEO Slams 1,250% Basel Risk Weight for Bitcoin, Urges Rule Revisit
Strategy CEO Phong Le criticized an illustrative Basel III–style chart showing a 1,250% risk weight for bitcoin, arguing that such capital treatment makes bank involvement in bitcoin prohibitively expensive and steers activity to unregulated or offshore venues. The chart (shared on X by Jeff Walton) contrasts bitcoin’s 1,250% “typical” risk weight with 0% for cash, physical gold and U.S. Treasuries, and much lower weights for corporate debt and equities. Conner Brown (Bitcoin Policy Institute) and others say the 1,250% figure effectively requires banks to hold $1 of capital for every $1 of bitcoin exposure, discouraging custody and on‑ramp services inside regulated banks. Le framed the issue as structural—rooted in Basel Committee standards that feed into national regulation—and warned that U.S. implementation should be revisited if Washington aims to be a global crypto hub. At press time Bitcoin traded near $67,857. Key keywords: Bitcoin, Basel III, risk weight, bank capital, custody, regulation.
Bearish
High regulatory capital charges—which effectively force banks to hold $1 capital per $1 of bitcoin exposure at a 1,250% risk weight—raise the cost of on‑ramps, custody and institutional market‑making. That reduces bank participation and liquidity provision, widens bid‑ask spreads, and can concentrate activity in less regulated venues; all are near‑term bearish for price and trading depth. Historically, when banks face punitive capital treatment or regulatory uncertainty (e.g., post-2017 crypto restrictions or banking de-risking episodes), institutional flows slow and volatility rises. In the short term expect muted institutional bids, thinner order books and higher volatility. Over the medium to long term the effect depends on policy response: a recalibration lower than 1,250% or clear domestic guidance could restore institutional participation (bullish), while persistence of punitive weighting will keep activity fragmented and constrain price discovery (bearish). Traders should watch regulatory guidance from the Basel Committee, national implementations, bank disclosures of crypto exposure, custody product launches, and liquidity metrics (volume, spreads, funding rates) to gauge shifts in institutional involvement.